How to Participate in Dividend Paying Life Insurance
While there are many types of insurance products available, there are two ways an insurance company may be run: participating or non-participating. A participating company is owned by its policy owners with a non-participating being owned by shareholders. Owning an insurance policy in a participating company means that you will be paid an annual dividend based on the earnings of the company. This dividend is determined and announced annually by the board of directors.
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Instructions
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Ask your insurance agent if the company he is recommending for whole life insurance is a participating or non-participating company. If he is unable to answer this question, consult your local Insurance Commissioner's office for the information. Information on how to reach each state commissioner is at the National Association of Insurance Commissioner at www.NAIC.com. (Also consider getting a new agent who is more knowledgeable.)
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Purchase a policy that is a participating policy according to your insurance needs. In other words, don't buy more insurance than you need just in the hopes of an annual dividend. A non-participating policy will not pay dividends.
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Request a dividend election form from the insurance company.
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Fill out the form with your name, policy number and pertinent contact information. Review and designate the option that suits you.
You will be able to choose from one of three methods of dividend payment: added to cash value, premium payment or direct payment. Dividends may be elected as an annual disbursement or quarterly. Check with your company to see what their regulations are regarding dividends.
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